Avantor, Inc.’s (NYSE:AVTR) latest 11% decline adds to one-year losses, institutional investors may consider drastic measures

Important Findings

• Significantly high institutional ownership implies that Avantor’s stock price is sensitive to its trading activity
• 50% of the company is held by the 12 largest shareholders
• Analyst forecasts along with ownership data serve to provide a strong idea of ​​a company’s prospects

If you want to know who really controls Avantor, Inc. (NYSE:AVTR), you need to look at the composition of the stock register. The group with the most shares in the company, around 89%, are institutions. In other words, the group will gain the most (or lose the most) from their investment in the company.

It follows that institutional investors were the hardest-hit group after the company’s market cap fell 11% to $15 billion last week following a fall in its share price. This group of investors may be particularly concerned about the current loss, which adds to a 34% year-on-year loss for shareholders. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Consequently, if the downtrend continues, institutions could come under pressure to sell Avantor, which could have a negative impact on individual investors.

In the graphic below, we’re zooming in on Avantor’s different ownership groups.

Check out our latest analysis for Avantor

What does institutional ownership tell us about Avantor?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. As such, they typically consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a significant stake in Avantor. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. If several institutes change their opinion on a stock at the same time, the share price could fall quickly. It is therefore worth checking out Avantor’s winning history below. Of course, what really matters is the future.

Institutional investors own over 50% of the company, so collectively they can likely heavily influence board decisions. We find that hedge funds have no meaningful investment in Avantor. T. Rowe Price Group, Inc. is currently the company’s largest shareholder with 17% of outstanding shares. The second- and third-largest shareholders are The Vanguard Group, Inc. and BlackRock, Inc., with 9.2% and 5.8% of outstanding shares, respectively.

After investigating further, we found that the top 12 collectively own 50% of the company, suggesting that no single shareholder has significant control over the company.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. Quite a few analysts cover the stock, so you can easily look at the projected growth.

Insider ownership of Avantor

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. Management runs the business, but the CEO is accountable to the board even if he or she is a member.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

Our latest data shows that insiders own less than 1% of Avantor, Inc. Since it’s a large company, we’d assume insiders only own a small percentage of it. But it’s worth noting that they own $77 million worth of stock. It’s always good to see at least some insider owners, but it might be worth checking to see if those insiders have sold.

General Public Property

The general public — including retail investors — own a 10% stake in the company, so it can’t be ignored. While this group may not necessarily be in charge, it can certainly have a real impact on how the company is run.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Avantor, we need to consider many other factors. You should find out more about this 2 warning signs we discovered Avantor (including 1, which is a bit worrying) .

If you’re like me, you might want to think about whether this company is going to grow or shrink. Luckily, you can check out this free report that includes analyst forecasts for the future.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.